The IPSA is among the best performing emerging-market indexes this year with its jump of 30%.

Chile's currency posted a slight gain, trading at 496.53 pesos per U.S. dollar from 496.73 pesos on Tuesday, after the central bank said it now expects gross domestic product growth of 5% to 5.5% this year, higher than its previous projection for growth of 4% to 5%. Activity has been fueled in large part by reconstruction efforts prompted by a devastating earthquake that struck the country in late February.

More than 500 people died and the quake created roughly $30 billion in damages.

In their quarterly inflation report, monetary policy makers said they expect inflation to end at a rate of 3.9% in 2010, a slightly higher view from the previous forecast of 3.8%.

Chile's peso had moved lower earlier in the session after a separate report showed consumer prices in August fell 0.1% from July, an unexpected dip as analysts polled by Dow Jones Newswires had expected, on average, prices to rise 0.1%.

Elsewhere in regional trading, Mexico's IPC equity index turned lower to close down 0.1% at 32,409.60, and Argentina's Merval rose 0.1% to 2,419.92.

The indexes ended off session highs, unable to hold to stronger gains after the U.S. Federal Reserve said its Beige Book survey of economic conditions showed growth slowed during the summer, but that the economy was still expanding at a moderate pace.

The markets had also found earlier support, along with Wall Street, after a successful sovereign debt auction in Portugal eased concerns about financial conditions in Europe and their impact on global growth prospects. The S&P 500 Index
SPX, +0.22%
closed up 0.6% on Wednesday. Read more in Market Snapshot.

Petrobras share-sale pricing in sight

Brazil's Bovespa (BVSP) finished 0.5% lower at 66,407.28. Trading in Brazil was closed in the previous session in observance of the Independence Day holiday.

Among session decliners were preferred shares of Petrobras
PBR, +0.56%
down 4.3% to mark their first losing session in six. The shares had risen nearly 12% since last week in anticipation of and after the oil giant reached an agreement with the Brazilian government to pay an average $8.51 per barrel in stock in exchange for rights to explore and develop 4.999 billion barrels of oil equivalent in Brazil's deepwater fields.

The share-swap agreement led to the company's related offer of $64.5 billion in new shares in an effort to fund its five-year, $224 billion investment plan. The share offering is slated to price on Sept. 23.

"It's going to be good news when it's all signed and sealed, but once the euphoria of this huge share sale is over, people will recognize the mammoth capex requirements and long-term and medium-term issues that Petrobras is going to have," said David Riedel, president of independent equity research firm Riedel Research Group, in a telephone interview.

"We believe in the story very much long term, but we think this heavy capex cycle dampens the stock in the short and medium term," he said, adding that the stock could underperform for about a year.

Uncertainty surrounding the Petrobras deal had pushed the shares lower this year, down by 24%. The shares finished 2009 with a jump of 61%.

Riedel also said he has a cautious view toward shares of Petrobras and iron ore giant Vale
VALE, -2.40%
ahead of the first round of voting on Oct. 3 in Brazil's presidential election.

He said presidential front-runner Dilma Rousseff is likely to have a "heavier hand" of government on companies like Petrobras and Vale, "making sure that resource extraction is being done in a way that benefits Brazilians."

Excess profit taxes and mandatory investment in domestic processing facilities are among the moves that Rousseff could support if she wins her bid, he said, and that could mean pressure on the Bovespa index heavyweights over the next year.

"I don't think that anything that she does will cause any dramatic change in the longer term value of these companies, but on the margin it could have an impact...and that could weigh on the whole index," said Riedel.

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